In overnight trading, soybean futures are already closing in on lock limit up. Prices are just seven cents from the daily limit, and the primary day-time trading session hasn't even begun yet. Yesterday's settlement price is so far below the prices on the above chart, the line depicting it (yesterday's settlement price of $1257) doesn't even appear. Soybean prices are nearly $1.00 higher than where we started the week, and the Tuesday session open hasn't even started yet.Commodities Come Roaring Back?
Gold is significantly higher, also, $30 off its lows. Only energy prices look weak, but don't expect them to stay down for long. Crude oil has remained resiliently above $100/barrel, and if it holds, prices will surge higher again also. So much for the commodities rout! So much for inflation being under control!
There are some excellent articles this morning on Marketwatch.com. Read the one by Paul Farrell about the necessity of taxes going up, regardless of who wins the White House this fall. Read also the one by Irwin Kellner about inflation and the M3 money supply. Greg Robb also wrote a good one called, "Painting Lipstick on a Pig".
Ultimately, there are only three ways to pay for the monstrous US Government deficits:
- Higher taxes. There is little political will for this one.
- Borrow from nations that save (China, Japan) or have oil wealth. Eventually, these people will no longer be willing to lend when they realize we can't pay them back.
- Monetize the debt. This means that the Fed just keeps creating more and more fiat money, paying for the deficits with devalued currency. It also means inflation, as the US Dollar buying power depreciates. It could mean hyperinflation!
Look out below!
